Too many people here think buying the long bond is a sure thing.
The basic yield does not cover CPI, much less the actual cost of living. Then you have to subtract taxes on the yield, so you are losing money year after year, straight out of the gate.
Ah, but the short term thinkers tell us they are investing in Miami condos for the capital gain, not for the income. Long bonds will appreciate as yields collapse. Its a sure thing, as sure a thing as the condo flippers pre-2008.
What happens if the economy picks up again? Bonds get destroyed.
What happens if the economy stays soft for decades like Japan, you get your just principal back but its worth less because coupons didn't even cover CPI. The price appreciation goes to zero when the bond matures in 30yrs.
Ah again! The smart alecks tell us they will flip their condos -- I mean long bonds -- to a bigger sucker before the &*_) hits maturity. Who are these suckers, and what makes you think they are going to buy this garbage from you when and if the US government gets its act together? What makes you think everyone else isn't going to want to dump their condos and long bonds when you do?
They say history doesn't repeat, but it often rhymes. Yesterday's "sure thing" condo flippers are today's "sure thing" long bond buyers
If history is any guide, bloated governments also default on their debt -- which over a 30 year horizon is well within the possible scenarios for US Treasuries. If baby boomer parents were always good for the money, does not mean boomers or millennials will do the same. Actually, history suggests they will default even though their parents taught them better. See every major empire throughout human history for examples.
But lets assume Uncle Sam defaults on Social Security but somehow doesn't default on Treasury bonds too. Will everyone flip their worthless condo at the last minute, or will a lot of people be left holding the empty bag?